Self-control, financial literacy and consumer over-indebtedness

John Gathergood

Journal of Economic Psychology, 2012, vol. 33, issue 3, 590-602

Abstract: This paper examines the relationship between self-control, financial literacy and over-indebtedness on consumer credit debt among UK consumers. Lack of self-control and financial illiteracy are positively associated with non-payment of consumer credit and self-reported excessive financial burdens of debt. Consumers who exhibit self-control problems are shown to make greater use of quick-access but high cost credit items such as store cards and payday loans. We also find consumers with self-control problems are more likely to suffer income shocks, credit withdrawals and unforeseen expenses on durables, suggesting that lack of self-control increases exposure to a variety of risks. In most specifications we find a stronger role for lack of self-control than for financial illiteracy in explaining consumer over-indebtedness. We discuss the policy implications of these findings.

Keywords: Self-control; Financial literacy; Consumer debt (search for similar items in EconPapers)
JEL-codes: D03 D12 E21 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (161)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167487011001735
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Self-Control, Financial Literacy and Consumer Over-Indebtedness (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:33:y:2012:i:3:p:590-602

DOI: 10.1016/j.joep.2011.11.006

Access Statistics for this article

Journal of Economic Psychology is currently edited by G. Antonides and D. Read

More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().